China pushes its citizens to buy silver and gold

The Chinese government is reportedly pushing the general public into buying silver and gold bullion - a move which could have a dramatic effect on the markets.

China's Central Television, the main state-owned television company, has run a news programme letting the public know how easy it is to buy precious metals as an investment, according to various news sources.

If 1.3 billion Chinese citizens start buying silver and gold, even in tiny quantities, the effects on the markets could be huge.

And it would also result in big changes for collectibles like coins, jewellery or watches.

China's investment in gold has already increased by 50% in recent years, according to New Tang Dynasty Television, at it is second behind India as the world's largest gold investor.

On silver investment the television announcer is quoted as saying, "China has introduced its first ever investment opportunity for silver bullion."

The news appears to signal a total relaxation of restrictions on individuals holding precious metals by the Chinese authorities - apparently in response to China's retail industry suffering in the recession.

Only a few years ago, the distribution of gold and silver was strictly controlled.

Now every bank will sell silver and gold bullion bars in four different sizes to individuals, and gold related investments are said to be rapidly gaining popularity, with the government apparently pushing investment options at every opportunity.

The bars are available in 500g, 1kg, 2kg and 5kg with a purity of 99.9%.

The vast majority of Chinese are not rich by western standards - so the initiative is most-likely aimed at the middle classes who could contemplate buying and holding physical metal.

China's enthusiasm for silver and gold investing has been shown at events like the China International Jewellery festival.

Gradually, China's population are being converted from being the lowest per capita gold consumers in the world to a nation of small precious metals investors.

Some speculate the China's gold consumption is likely to exceed that of India by next year - and people increasingly moving into big cities will accelerate the trend.

"Simply put, the Chinese government is trying to trigger a national gold craze - and it's working. The Chinese public now has gold trading platforms on steroids," said Paul Atherley, managing director of the gold mining company Leyshon Resources, in a statement.

While this may be an overstatement, prices on gold and silver, and related coins and jewellery items, will be sure to rise - perhaps dramatically - in the near future.

The general decline of global gold production could also lead to Chinese buying having an substantial impact on gold and silver prices.

And the developments could ease international trading.

"For the first time in history, Chinese investors can even trade gold abroad (in London) with the swipe of a 'Lucky Gold' card. I can't even get Bank of America to open a foreign currency account," said Atherley.